16 January 2012

Sean King, CEO, Move with Us, the residential property specialist, comments on the government's New build indemnity scheme, which will offer an estimated 100,000 homebuyers the ability to buy a new build property with only a 5% deposit.

Move with Us' view on the scheme

“The scheme is welcome news for aspiring home owners, significantly reducing the deposit needed to buy their own home by in effect around 75%. On a home worth £120,000 buyers would only need a deposit of around £6,000 rather than as much as £24,000*. In this case the £18,000 reduction could mean the equivalent of around three years of hard saving for a couple, both earning the average UK wage."

“It is a pity that the scheme could not be widened to existing housing as we believe this new initiative from the government could help those disadvantaged by tougher lending rules realise their dream of moving up the property ladder. “

“While it is a positive move, we are waiting for more detail about the eligibility criteria for the 95% loans and we question if this will be wide enough for the government to reach its target of helping 100,000 families and young people move into homeownership.  This level of detail and the reliance on new home developers to promote the scheme may actually deter the less committed buyers from applying at all. Clear guidance on eligibility and a promotional push will be needed for the scheme to succeed."

Stamp duty holiday v. new build indemnity scheme
“The changes to stamp duty that are due to come into force for completions after 24 March 2012 will only impact those with the big deposits who are in a position to buy already. Those who are struggling to build up their deposits and will be looking to take advantage of needing just a 5% deposit can only wait patiently for 1 April to make their move.  It is, however, good to see that the government remains committed to the first-time buyer crisis and are looking for ways to accommodate need in the market.”

Tips for buying new build
“It is important to remember that there are many positive aspects to buying a new build property. Those considering buying a newly built home can often take advantage of a range of incentives that developers offer, including contributions towards legal fees, free appliances and stamp duty relief, as well as offering building guarantees for the the structure itself. "

“Key points for buyers of new build properties on an estate, for example, are  the plot’s position and garden. Both can have an impact on future selling prices particularly if you are seeking to attract family buyers. New homes are generally more energy efficient and give buyers the opportunity to personalise the property to their own tastes. However, it is important to remember that you may want to sell it in a few years time, so when picking kitchens, bathrooms, flooring and tiling you should stick to a classic look. If you have additional money in your budget adding high-end worktops is also a prudent investment."

“Those looking to buy a new property should follow the same principles as any buyer: location, parking, local amenities and schools are all important considerations.  Not only will they make your time in your new home more pleasurable, but they will  be good selling points  when you decide to move on."

*Based on a typical deposit required of 20% and the average UK income according to the National Office of Statistics of £26,244.

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